Bankly

In the absence of a formal institution, the unbanked adopted an informal banking system known as "Ajo / Esusu". It is half a century old system predominant in West Africa and involves a “trusted” agent collecting daily savings ranging about 30 cents to a dollar within a community. More than 85% of the participants are women who for cultural reasons do not own a bank account

Security - customers have no form of control against death of agents; theft, fraud, and disappearance of an agent.

Access - Can't access their funds anywhere or even anytime.

Data - Limited to loan sharks for credit facilities at predatory rates

Price - It cost 3.34% of savings amount.

Bankly uses a wallet system and a distribution network to digitize savings for the informal sector while reducing cost, securing the deposits and creating a transaction history to access credit, insurance etc. 

The informal sector earns their income daily in cash and are unable to digitize cash due to several factors such as lack of access to formal institutions. Even where there's access, the informal segment namely market women, commercial transport workers, farmers etc. work long hours at their location of trade. A typical market woman is at her stall till 7pm daily, at which time, a bank is closed. They are forced to save at a 3.34% cost with thrift collectors and are exposed to losses due to theft, fraud, unable to access formal credit or insurance. 

According to a Mckinsey fintech landscape report presented August 2020, there are 99.6 million Nigerians, 

39.5m - Banks

8.6m - other formal (MFBs, cooperatives etc.)

14.6m (informal only (Thrift collectors and pool clubs, these represent Bankly target segment)

36.6m excluded. 

Even with 43% of the Sub-Saharan African population financially included, 95% of retail transactions in Africa are conducted in CASH.

We've seen governments claim to distribute millions of dollars to the most vulnerable citizens in cash (limiting transparency and increasing infection in these COVID times) with little to show for it and it is the informal sector who suffers the most

Bankly is specifically targeting 14.6m Nigerians in the informal sector who currently save informally. During a 6-month long primary research with Accion Venture Lab, we built and deployed a Minimum Viable Product and tested for 8 months in Abeokuta (a university town in South Western Nigeria).

We realised 5 major needs:

Access: Bankly deployed agents to local communities/markets, savers are registered using their mobile number. Information collection is simple and account is open in seconds.

Security: Cash is given to Bankly agent and a peer to peer transfer is initiated from agent to saver. The saver receives an SMS alert showing proof of savings and leverages channels such as USSD to view balance and perform other transactions. Leading to transparency, reduces disputes and eliminates losses from agent flight risk.

Low barrier: Using our mobile app, agent collects basic Know Your Customer data and takes a photo creating a form of identity card for savers with none.

Goal based: Customers want to reach certain goals ... purchase of tools, rent etc. and they need a partner that encourages and incentives them to meet these goals. 

Access to credit: Transactional data necessary to offer credit directly or through its partners

Bankly's solution directly connects to the Mission Billion Challenge as it encourages digital savings, protects the informal sector from losses, incentives and rewards goal based savings, leading to behavioural data necessary to design better social schemes to directly address the pain points of the low income and give them security.

Bankly has developed a deep understanding of its target market and is reaching them using a 3-phase model:

Phase One (Cash Digitization and Distribution): Similar to the Telcos model of penetration in Africa, Bankly is building a wide distribution of agent currently 9,000 strong in its first 12 months. Also growth hacking by leveraging existing agent networks using its Savings As A service API to onboard customers in location where it has no direct presence.

Phase Two (Data As A Service): As customer identity is validated and self-service becomes standard, we have increasing insights through transactional data and this data enable us to provides other services directly and through partnerships.

Phase Three (Full Digitization and Inclusion): At this phase, customer's inflows are mostly digital due to a network effect and we have robust consumer insight and substantial transactional data we can use to design direct-to-customer products. Customers are also more digitally literate and can interact with our products independently.

Why we are different from other agent networks: 

1. We are customer acquiring. We focus on owning the customers rather that just serving as a platform for transactions via agent banking.
2. We own behavioral data for the informal segment and are armed with consumer insight to design direct-to-customer services and predict future needs.
3. We emphasize financial literacy of both agents and end customers to improve stickiness of our solutions.
4. Customer vs Agent Focus: We understand there is a difference between access and inclusion and we are committed to building an inclusive system. 

Bankly believes in the following hypothesis: For financial services to reach the last mile, it has to be seen through the lenses of a fast moving consumer good. We are replicating the 3 phase model Telcos used for mobile penetration to bring financial services to the last mile:

1. Service Phase: Here, the agent was King. Telecommunication companies (Telcos) engaged large agent networks as points of service for the digitally excluded. People did not own phones and depended on these agents for communication
2. Commodity Phase: Agents became the point of sale for telco vouchers. Customers could now afford mobile phone, but agents were still needed to drive cash digitization hence sale of airtime vouchers

3. Network / Inclusion phase: Customers could access airtime and data directly. Telcos deployed their service across multiple channels and integrated with other partners like banks to deploy more services to the formal segment.

https://mobileecosystemforum.com/2015/05/07/10-things-you-need-to-know-about-vouchers-digitizing-cash/

In just a little over 12 months of operations, here's some data about our traction:

• 28,000+ customers concentrated in Northern Nigeria where the financial exclusion rate is as high as 63% and average adult literacy rates are as low as 35%.
• 130% Month on Month growth rate on inflows
• $ 15 Million transaction and savings value ytd.
• $ 234,210 Value of savings protected 
• $ 180,000 Credit given with less than 3% default
• 88% Month on Month growth rate on revenues
• 9,500 agents supported by over 200 aggregators
• 47% of users are women.

Our overall Theory of Change is to improve income for the informal sector and alleviate poverty (Sustainable Development Goals 1)

In order to do this, we realized financial inclusion is positively proportional to poverty alleviation. Our next thought is, how do we get financial services to the last mile similar to how coca cola, beer, airtime, cigarette is widely available at every remote location in Africa where financial services is unavailable.

We then built a hypothesis: For financial services to reach the last mile, it has to be seen through the lenses of a fast moving consumer good.

We began to build a 2-tiered distribution system, aggregators aka wholesalers aka distributors who in turn will onboard last mile agents. In the first phase, the agents will perform transactions to serve the communities around them, providing jobs and driving economic activities for these micro-entrepreneurs, we train and empower them to understand the need for financial services and help them with marketing materials to onboard customers .

By on-boarding customers, they help to create identity and transaction history for the members of the community. This leads to the creation of powerful data necessary to understand the behavioral patterns of the people in such communities and extend services such as affordable credit (input for farmer, asset financing for artisan etc.), this new influx of capital leads to increased production, while also helping to provide protection in form of insurance (health insurance, harvest insurance for farmers who can easily lose a full harvest season due to illness ...

Armed with this behavioral insights and transactional data, we can partner with governments, NGOs to understand how best to support these communities and drive policies that will directly impact these communities, improving overall quality of life and reducing poverty.

Using our Data as a Service solution, the identity, location and production capacity of millions of Nigerians is now visible. 

Financial identity is no longer a problem because we provide insight into consumer behavior and transactional patterns. We also interpret the data to develop direct-to-customer (D2C) products and services for social protection and service delivery.

We have also built the digital and offline technology necessary to reach tens of millions of the vulnerable securely and quickly using our remittance feature. With domestic remittances, individuals do not require a bank account to do a cash pickup, simply requires a user to have a mobile phone that can receive an SMS message and visit our direct or partner agents present in every local government of Nigeria.

Enabling NGOs, government agencies etc. to send money to target recipients via Bankly. W e will also enable remittances, even to those without a bank account. Remittances simply needs to be initiated via Bankly with specific details such as phone number of the receiver. Once a remittance is initiated, the receiver gets an SMS with a unique code to be presented to any Bankly agent.

Bankly has built a truly user friendly solution by: 

• Engaging a vast agent network to provide last mile delivery of financial services. 
• Enabling customers to open a Bankly account by answering basic question and accepting to have their picture and biometrics taken where necessary.
• Increasing women's participation in financial inclusion because the system is one that is already culturally acceptable
• Coming to them in the  language and people they already know.
• Modeling our services in ways that are already familiar .
• Educating  them on the services available to them.
• The provision of USSD as a channel to our customers ensures ease and all-round access for customers who are not technologically savvy enough to use a mobile app or even afford a smartphone.

Bankly has built its Savings products as a single API open to all agent networks and have begun integrating its first partner with 20,000 strong agent network.

Interoperability of funds is also possible from a Bankly wallet to Commercial banks, micro-finance banks and other wallet operators in seconds as we are connected to Nigeria's Interbank Settlement System.

Our USSD is also available across all Mobile Network Operators in Nigeria

For low connectivity areas, our services work with 2G network as well as our point of sale devices. We have also built agent apps that can run on USSD. However, there are challenges with respect to the cost of USSD for a user such as an agent who performs several transactions a day and the cost potentially eroding every profit he earns and more.

However, for now we provide USSD and SMS service to all our customers in low connectivity areas. 

We engage users with low literacy skills using:

1 Field Sales Executives: These are Bankly contract staff that serve within their local community to bring awareness and train users on Bankly

2. Community Influencers: We leverage the social influence of certain individuals and community leaders in grassroot areas, onboarding them as aggregators to drive training, build brand trust and facilitate product adoption

Bankly currently serves 28,700 people in Nigeria. Our 5-year strategy is to serve 1.35 million Nigerians.

Our goals for the coming year is to ensure we are fully in alignment with regulatory requirements

• We're also aiming to attract strong talents for our scale phase and develop and upgrade our technology infrastructure to accommodate our proposed growth.  Complete and Reinforce anti-fraud system and controls
• We will leverage the distribution we have built in 2020 to reach our target segment leveraging a strong marketing and communications team tailoring language and channels to reach our users.
• Establish robust customer support infrastructure.
• Build necessary partnerships and collaboration to deploy pipeline products

Over the Next five years

• We would have built strong capacity in big data analysis and be a rich source of behavioural data to our target segment necessary to addressing their specific pain points in partnership with Governments, Impact organisations and NGOs.
• Bankly would be powering over 1.5 million Africans and supporting them to reach their goals while providing the necessary services needed to improve their productivity, standard of living and general quality of life

Financial: Bankly is currently fundraising and investors are cautiously holding on deals amidst the market uncertainties while all around us we’re seeing the effects of insecurity in the economy as daily earners who are typically unbanked are left to fend for themselves due to the fall out of the pandemic.

Despite a 118% growth in fintech investments in the last 9 years, the percentage composition of the unbanked population only improved by 9.8% as over 70% of those investments was to serve the banked population. Bankly needs investors whose interest and values are aligned and many mainstream Venture Capital firms don't readily invest in sectors that are more impact focused

Regulatory: The fintech environment in Nigeria and West Africa at large is still young and there is the risk of new regulations by the Central Bank and other regulatory bodies that might be harmful to the business activities.

Talent Acquisition: This is related to financial as without the right resources and brand visibility, we're unable to attract the talents necessary to achieve our goals

We are making the most of opportunities such as this to get the required brand visibility that could lead to meeting with investors whose goals are aligned with ours and also the chance of getting the required funding in grants.

This visibility is also necessary for talent acquisition and helps open doors within the industry that can create the required opportunity to influence policies that will favour our mission while aligning ourselves with the Financial Inclusion strategy of the regulators

21 Full time staff

- Technology (7)

- Operations (6)

- Products (2)

- Sales (3)

- Finance (1)

- Marketing & Comms

- CEO

4 Part time staff

35 Field Sales/Contract staff

The management team has a combined professional experience of over 34 years. The team is adequately skilled with experience spanning across the finance and technology industry. Specifically, the founders are passionate and dogged about solving financial inclusion

Prior to Bankly, Tomilola co-founded SmartCredit. SmartCredit was a lending product which offered nano loans to small businesses via a combination of the telco’s USSD platform and a mobile money wallet. By combing the borrower’s phone records, SmartCredit could decide who was or wasn’t eligible for a loan and how much they were entitled to. The money could be withdrawn via cardless transactions across ATM terminals in their locations. While it was easy to disburse the loans, tracking repayment became a Herculean task, as cash needed to be digitized and these borrowers lacked access to a financial institution (i.e. they could not redeposit at the ATM and bank branches were far away). In January 2018, she quit her job and dedicated her time full time to primary research to understand the challenges of the target segment.

Fred previously worked as a product designer at a Payments Company which had a mobile money product, ReadyCash. The challenges facing market adoption of the product was as a result of limited access points to deposit funds into the ReadyCash mobile wallets. Depositing  into a ReadyCash wallet was only possible via already digitized funds from a local bank. 

Ifeanyi Aneke  is a tech solution expert with over 15 years experience in software development. He currently serves at Microsoft as a Cloud Solution Architect while serving as the president of the Computer Software Developers Association of Nigeria

Interswitch

Providus Bank

United Bank for Africa

MTN 

Stratford Communications

HiiL (The Hague Institute for Innovating Justice)

Appruve Ghana

Chart showing the varios services Bankly offers and its revenue model. Blue: Existing and Navy: Pipeline

We are on track to achieving monthly breakeven by October 2020.

Bankly raised a pre-seed of $400,000 ($250,000 in Equity and $150,000 in debt specifically for its license) and another £20,000 in grant.

Angel Investors: (Equity)

1. Angel investor - $100,000
2. Pave Investments - $50,000
3. Angel investor - $30,000
4. Active Mosaic - $25,000 
5. Angel investor - $25,000
6. Arca Payments - $20,000

Debt (Bridge Financing)

1. WALY - $150,000

2. Active Mosaic - $50,000

Grants

1. The Hague Institute for Innovation of Law - £ 20,000

We are looking to close this Seed round by October 2020 and already have about 30% committed.